Obama’s Inadequate Response on Student Debt

More than 36 million Americans currently hold almost $1 trillion in student loan debt. Just 450,000 borrowers have taken advantage of the government’s income-based repayment plan to lower their monthly payments. The best possible outcome of President Obama’s announcement would be to raise awareness about the income-based repayment program so that the 1.6 million who are potentially eligible will sign on.

Tinkering with the student loan program does nothing to address the underlying issue: the soaring cost of college.

But these numbers clearly show that the relief offered by income-based repayment is inadequate to the scope of the problem. It doesn’t apply to parental PLUS loans. It doesn’t apply to private, unsubsidized student loans, which bear higher interest rates, have been growing at 25 percent a year (compared with federal loans at 8 percent a year) and are on track to match the volume of federal student loans by 2025. It doesn’t help defaulted borrowers, who face lifelong nightmares of snowballing interest rates and fees with little to no possibility of relief even through bankruptcy.

Most importantly, tinkering with the student loan program does nothing to address the underlying issue: the soaring price and cost of college. As state budgets wilt in the recession, public university tuition is rising even faster than private tuition, up an astonishing 8.3 percent just last year, led by a jump at the vast University of California system.

The reasons behind 30 years of climbing tuition are complex, but innovation offers some hope. Increasingly, I’ve been interested in approaches involving low-cost, open-source digital learning resources, adaptive learning technologies, peer learning, assessments based on outcomes rather than seat time, and experiential education. These ideas, some of which have been recognized by Obama’s Department of Education, all have the potential to lower real costs while improving outcomes in higher education. Bold, disruptive change is needed to restore us to the lost position of best-educated nation in the world.